Energy bills are falling today in a rare piece of good news, but households are being warned to act fast before prices surge again later this year as Rachel Reeves and Keir Starmer attempt to battle price shocks stemming from the war in Iran.
From today, the average annual gas and electricity bill by 6.6%, from £1,758 to £1,641 for a typical household, under the Ofgem energy cap. But experts say this relief may be short-lived.
Richard Neudegg, director of regulation at Uswitch.com, said the conflict in Iran is set to drive up the energy cap back up from July. He said: “The real worry is what this means for October’s cap, which dictates our winter heating bills.”
Neudegg said eight in 10 are worried about their energy bills rising and urged them to act now. He added: “Households have a real opportunity to protect themselves for the winter by locking in a fixed deal for 12 months or more.”
Forecasters Cornwall Insight predict the energy cap could jump by possibly by £332 to £1,973 a year from July. Neudegg said: “Fixing your energy rates now is the only way to avoid hefty price hikes that are predicted to come our way.”
Outfox Energy currently has the cheapest fixed rate dual-fuel contract at £1,673 for 12 months, which is £32 above today’s cap but comfortably below forecasts for July and October. Fuse Energy, E.ON Next, and Sainsbury’s Energy have competitive 15-month caps, while EDF Energy has a two-year cap at £1,949.
Gareth Kloet, energy expert at Go.Compare, said around 22 million households are on standard variable tariffs and therefore fully exposed to the full increase. “Take a look at your current energy contract, including the standing charges, unit rates and any early-exit fees. Then look for a deal that works for you.”
Sarah Pennells, consumer finance specialist at Royal London, said to pay by direct debit if you can, as it’s cheaper. “Your bill will be £1,641 from today, but £1,772 if you pay your energy bill when it arrives.”